Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Welcome to Reyna Retirement. Reyna Reyes has dedicated her career to helping people make small, smarter financial decisions. Raina Retirement is all about breaking down complex financial concepts into language you can actually understand.
Now, here's the co founder of American Federal Benefits Consultants, Reyna Reyes.
[00:00:40] Speaker B: Well, Little Orphan Annie says that the sun will come out tomorrow, and that's probably true. And many of y' all want to retire or quit now and just take your pension tomorrow or the next day or next year or when you're 62 or whatever that is. So what does that mean? You're looking at either a deferred retirement or a postponed retirement. What does it mean? Well, they both are kicking the can down the road. You're delaying the money. Either one of those scenarios means that you are quitting. You're not retiring. Feds post employees, you're not retiring. You will retire later when you actually turn on the money, but when you actually exit the premises, you are quitting. So to defer means I have quit, left, exited, said sayonara before my minimum retirement age and I had at least five years of service.
So if that applies to you, you're not at your minimum retirement age, which the oldest one is 57, but it could be anywhere between 56 and 57 ish, and you got five civilian years or more. You could quit and exit and go do whatever else it is you're going to do and then come back and claim your monthly pension. And at the age of 62. And why 62? Because at age 62, you only need five years, which is great. That's fine. So how can I postpone, Raina? Oh, by the way, if you defer, will you ever see health and life insurance again? Negatory, good buddy. They are gone with the wind. In fact, gone with the wind is where Scarlett o' Hara says, I won't think about that today, I'll think about that tomorrow. And that's what you're doing with postponing or deferring. You're not going to take that money today, going to take it tomorrow. And postponement is I quit. I did the same thing. I quit, I exited, I severed service, but I was over my minimum retirement age and I had more than 10 years. That is 10 years MRA and 10 you could have retired, meaning you could have taken the pension. But what happens then? That pension gets reduced pretty heavily. How heavily? You say, how big was it? Let's get some Johnny Carson in there. It was so big that, that, that penalty is so big that you have to make a big plan because it's 5% for every year that you're not 62. So let's say you're at your MRA and you're 57 years old. Well, that's great. Congratulations. You could retire because you have 10 years of service. However, it'll be reduced. How much? 5% for every year you're not 62. So I'm 57, 58, 59, 60, 61, 62. 5% per year. 5 times 5. 25% reduction. For how long? Ever.
Forever.
Ever, Ever.
The everlasting story. It's forever and that's how long. And you get no pen, no supplement, which is a big issue. So that's why many will go ahead and postpone that retirement that they could gone, could have gone ahead and receive. So if you postpone, you wait until your age matches your years of service. So if you have just 10, then you gotta wait till 62. But if you have more than 20, 20 or more, you could turn it on at age 60, because at age 60 you only need 20 and then you have no reduction. But you also will never have a supplement because you postponed. So there you have it. Quick, tiny little overview of the deferral or postponement example, if that's what you're considering, and if that is the case, let me know. Reach out. You don't necessarily need help quitting because that's simply putting in your two weeks notice or whatever type of notice you want to give them. But the question is, what money am I taking? TSP you can take. That has nothing to do with it. It's your pension contributions that you don't want to take because that's what's waiting on you to take the money later. As I would call it, Gatorade. But that's a story for another day, my friend. We'll talk to you then.
[00:04:27] Speaker A: Thanks for listening to Reyna. Retirement. With a strong commitment to ethical standards, Rayna works hard to find the right solution for each individual or family who reaches out for advice. To contact Reyna directly, call 850-450-6500. That's 850-450-6500. Or to reach the team at American Federal Benefits Consultants, call 1-800-872-8857. That's 1-800-872- 8857. You can also go online to American Federal Not Affiliated with the United States Government. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. The information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. American Federal Benefits Consultants is an independent organization, not a government agency or affiliated with the Federal Government or any state government. The terms CSRs, FERs, FELI, and FEHB are all registered trademarks of the U.S. office of Personnel Management. American Federal Benefits Consultants, agents, consultants or any independent contractors do not provide tax, legal or investment advice and do not engage in the solicitation or sale of securities. Consult with your tax advisor or attorney regarding specific situations.
